Morgan Stanley has downgraded Novo Nordisk to Underweight, and the market took notice. The stock dropped around 2.4% in Copenhagen trading following the call.
Analysts led by Thibault Boutherin said the company’s current valuation does not fully reflect its subdued mid-term growth outlook. They kept their price target at 250 Danish crowns, which implies more than 10% downside from the last closing price.
The core concern is semaglutide, the active ingredient in Ozempic and Wegovy. It made up 75% of Novo’s total sales in 2026.
That reliance becomes a problem in the early-to-mid 2030s, when semaglutide faces patent expiry in both Europe and the U.S. Morgan Stanley models the drug still accounting for 59% of sales in 2031, when loss-of-exclusivity begins to bite.
Morgan Stanley is projecting 2-3% revenue and EBIT growth for 2027, roughly in line with consensus. But from 2027 to 2030, it sees only a 4% compound annual growth rate for both revenue and EBIT.
That compares unfavorably to the 4% revenue and 7% EBIT growth the bank expects from the broader European pharma sector over the same period.
The bank does see Novo’s oral obesity franchise reaching $10 billion in sales by 2031. But analysts said that figure “will not be enough to offset pricing and competitive headwinds.”
A proprietary Morgan Stanley survey of 200 primary care physicians found growing adoption of GLP-1 drugs overall. However, it also flagged market share losses for Novo over the next 18 months, as Eli Lilly’s current products and its upcoming retatrutide, expected in 2027, gain traction.
On valuation, Novo trades at 12.5 times 2027 estimated earnings. That is a 7% discount to European large pharma peers, but a 35% premium to global peers facing similar patent pressures, such as Sanofi and GSK.
Morgan Stanley flagged that gap specifically, noting the premium is “more pronounced” over GSK at 10x and Sanofi at 8x.
Novo’s capital markets day is scheduled for September 21. Morgan Stanley expects management to reaffirm its oral obesity strategy and provide updates on business development in areas including MASH and chronic kidney disease.
The analysts said they see “limited scope for major announcements” at the event.
One potential upside for the stock would be if oral obesity treatments capture more patient market share than currently expected and hold up better against competition and generics than modeled.
Morgan Stanley’s downgrade puts the stock in Underweight territory, a position that suggests the analysts expect it to lag its peers from here.
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